Comments on: Proxy Moxie: Schering-Plough’s Magic Market Cap

By: condor

condor — Tue, 20 May 2008 12:56:52 +0000

UPDATE TO MINE:

Perhaps Ms. Wolf’s remarks may be read to mean that since the time Mr. Hassan joined Schering-Plough, the stockholders have never approved a plan that allowed pay on “Market Cap” increases. And perhaps, we are required to infer, all by our lonesome-sleves, that the 2006 proxy makes payments out of the 2002 Schering stock-based compensation plan, not the 2005 version. And while that 2002 plan does, in fact, allow “Market Cap” as a metric, it is — to my eye — the hieight of sophistry to write what she wrote. In exactly what way, Ms. Wolf, does such parsing about CEO compensation help “earn trust, every day“? I am shrugging, here.

By: Dan

Dan — Tue, 20 May 2008 12:56:05 +0000

Ed,

Thanks for posting this and supplementing your related post on this issue yesterday.

By: condor

condor — Tue, 20 May 2008 12:27:27 +0000

Quite so, destor23 — Thanks for the H/T, Ed! — but it is significant that Schering did not have PERMISSION from its sharelholders to pay based on “market cap”, as NYSE listing standards require, for such compensation plans (and by reference, as SEC rules therefor require).

So it is not just bad comp. policy, at Schering, in play here — it may actually be. . . unlawful.

By: destor23

destor23 — Tue, 20 May 2008 12:12:30 +0000

The only difference between market cap and the total shareholder return is the dividend, which is 6.5 cents per share per quarter. It was 17 cents a quarter before Hassan took over. So, if total shareholder return is the metric, that makes a worse case for Hassan. The market cap is back to where it was when he started and the dividend is a fraction of what it was, amounting to a negative total shareholder return.